ORDER
K.S. Dilipsinhji, Member (T)
1. M/s. Kamani Engineering Corporation Limited filed an application dated 18-11-1980 to the Govern- ment of India under old Section 131 of the Customs Act and this has been transferred to the Tribunal under Section 131-B ibid and is to be treated as an appeal before the Tribunal. The appeal is against the order No. SG/79/74-A / S/19-142/74-LBIIB, dated 15-11-1975 passed by the Collector of Customs, Bombay as confirmed by Order No. 29 of 1980 under F.No, 381/69/77-Cus.II(A), dated 31-3-1980 of the Central Board of Excise and Customs, under which a fine of Rs 6 lakhs was imposed in lieu of confiscation of a consignment of brandy concentrate imported in 42 fus under B/E No. 246PE per s.s. Oceanfels valued at Rs. 96,539/-c.i.f. for contravention of Import Trade Control Regulations.
2. Appearing on behalf of the Appellants, Advocate Shri Taleyarkhan submitted that the consignment in question was imported by the Appellants under the licence for “brandy concentrate” issued to the Appellants’ associates for the Policy AM-1973. The list pasted to the import licences permitted inter alia “brandy concentrate” as per S.No. G/2.1 on page 134 of the Import Trade Control Policy Volume II. The licences in question were issued to M/s. McDowells and Co. Ltd. account M/s. Herbertsons Ltd. and were transferred to M/s. Kamani Engineering Corporation Ltd. The goods in question were imported from France for blending with Indian made foreign liquor produced from locally made alcohol. The purpose for the blending was to impart the aroma of French brandy to the Indian made foreign liquor. It was necessary to import the alcohol of a higher strength, as this was necessary for the purpose of blending. The goods imported were over-proof as had been admitted in the Board’s order. The goods were not meant for direct consumption after diluting with water as held by the Collector or the Board. In fact the Board had conceded that the goods were meant for blending. The importers had also produced a certificate from the suppliers which was to the effect that the “brandy concentrate” in question was not a brandy within the normal meaning of the term even after adding water with it. The Circle Inspector of Excise, Varanad, in his certificate dated 2-9-1974 had also testitied that the imported “brandy concentrate” was for use in the blending of brandy produced by M/s. McDowell & Co. Ltd. in their distillery division. In addition to this evidence the Appellants would rely on standard work of Shri M.G. Menon on “Alcoholic Beverages Consumers Digest” 1973 Edition, an extract from which had been produced by the Appellants in their paper book, which was from the Chapter on Indian made foreign liquors. The Advocate also referred to the Article on production of brandy by Shri M.C. Chatrapathi, a copy of which was also filed with the Tribunal. He drew our attention to the fact in the Article that in India wine and brandy industry had just come into being and that most of the brandies sold in India were either synthetic or blended with molasses spirit and that the brandies sold under foreign labels were flavoured with “brandy concentrate”. The Advocate further relied on the letter dated 4-7-1974 of Shri B.K. Jha addressed to Shri V.A. Castellino of M/s. Herbertsons Ltd., Bombay. He pointed out that Shri Jha was a member of the Committee of the Indian Standards Institute which evolved standard number I.S. 4450 of 67 for Indian brandies. Shri Taleyarkhan further submitted that the Committee which evolved this standard included the Chief Chemist of the Central Revenue’s Control Laboratory and other officers of Central Government. He thus tried to emphasise that the standard evolved had a great deal of authenticity. In particular Shri Taleyarkhan referred to the requirements of brandy on page 4 of the standard. Comparing these requirements with the test report dated 25-6-1974 of the Chemical Examiner who tested the imported goods Shri Taleyarkhan contended that the imported goods were 2.1 to 2.4% o.p. whereas the percentage of alcohol in brandy as per I.S. standard was 25 degrees under-proof. On account of the high alcohol content in the imported goods they were not drinkable as such. Because of this defect the Board on appeal quashed the first adjudication order of the Collector and directed re-adjudication. The fresh show cause notice issued took into account the description of brandy under the B.T.N. The Collector in the second adjudication order also relied on heading No. 22.09 in Section IV of the B.T.N. Based inter alia on this evidence the Collector held that the import licences were not valid for the goods in question. The Advocate argued that this finding of the Collector was not correct. He added that the B.T.N. was not meant for interpreting the Import Trade Control Schedule. While it was true that the imported goods came within the purview of heading No. 22.09 it was not true as held by the Collector that the “brandy concentrate” was drinkable as an alcoholic beverage. Referring to the French Customs Certificate dated 18-3-1974 the Advocate argued that it described the goods as EAV-DE-VIE DEVIN. This meant “Water of Life of Grapes”. the Advocate stated that if the goods were potable brandy the certificate need not have described them as “water of life”. For a correct meaning “EAV-DE-VIE DEVIN” the Advocate referred us to the extract from “Drinks and Drinking” by John Doxat, a copy of which has been filed with the paper book. According to this authority “EAU-DE-VIE” would mean any spirit in France but virtually meaning those which had no special name or distinction. The authority added that instead of describing them as “water of life” they could be better described as “water of death”. Arguing further the Advocate stated that the same authority mentioned brandy. If “EAU-DE-VIE” had the same meaning as brandy as held by the Collector of Customs, Bombay, there would have been no need for making this additional reference to brandy in this book. Referring to the Board’s order in appeal the Advocate stated that it took into account the past practice with regard to interpretation of licences. The licences granted for brandy were permitted to beutilised for the clearance of “brandy concentrate” under the Policy. The French Customs Certificate used the wider term of “EAU-DE-VIE” instead of brandv. But it could not be interpreted to mean that the goods were not over-proof brandy. As regards the evidence in the nature of the certificate of the Circle Inspector of Excise, Kerala, dated 2-9-1974, the findings of the Collector and the Board in this regard were perverse. Similarly, the Board had not correctly interpreted the suppliers certificate. The heading No. 22.09 in the B.T.N. does not refer to any percentage of alcohol in the beverages. Shri Taleyarkhan once again reiterated that reliance on B.T.N. could not be made in interpreting the Import Policy. It could be only as a guideline. In this behalf he referred to the Government of India’s decision in the case of Modern Engineering reported in 1980 E.L.T. 61. He further referred to the Bombay High Court’s decision in the case of Halldyne Glass Works 1980 ELT 291 which also was to the same effect that the B.T.N. could not be accepted for interpreting the excise tariff. The Adovcate relied on one more authority reported in 1983 ELT 1182 in the case of Saurashtra Chemicals. The Advocate posed the question as to what the goods were, if they could not be held to be brandy concentrate? If, however, there was a doubt in the classification of the goods, the benefit of doubt should go to the importer. The Advocate stated that the Collector had not levied the penalty and in this regard he had accepted the bonafides of the company and absence of mens rea. In the first show cause notice issued to the Appellants the goods were described as an essence. In the supplementary show cause notice a different ground was taken up. However, in an identical case the Government of India had allowed revision petition as reported in 1981 ELT 375 in the case of M/s. Tata Exports Ltd. and Another. A copy of this decision was filed with the Tribunal. Shri Taleyarkhan read para 10 onwards of the Government of India’s order. He stated that the present appeal was identical with the case decided by the Government of India and therefore the benefit of that decision should be extended to the present appeal. Finally., the Advocate submitted that the fine in lieu of confiscation was grossly excessive and also against Section 125 of the Customs Act which laid down the limit of the fine. He contended that the c.i.f. value of the goods was Rs. 96,539/- and the duty leviable was Rs. 8,72,364/-. In determining the market value for the purpose of the levy of the fine the import duty was not to be taken into accounts. Therefore the maximum limit for the levy of fine could be Rs. 2,00,000/- only, in the present case. In this behalf the Advocate drew out attention to written submissions made before the first appellate authority, a copy of which has been filed in the paper book. In view of these circumstances the Advocate requested that the Collector’s order for levy of fine should be set aside and the appeal should be allowed.
3. On behalf of the Respondent Shri Pal submitted that the licences utilised for the clearance of the consignment were issued to registered exporters for the heading No. G.2.1 for the Policy Period AM-1973 Vol. II. Inter alia these licences permitted import of “brandy concentrate”. The importers claimed that the goods were “brandy concentrate” only. However, the customs authorities had held that they were brandy and for the import of brandy only the established importers were given the quota licences. As set out in the adjudication order the same goods had been imported and cleared under licence issued at Sl.No. 84, Part IV of the Policy. There was no Policy for permitting actual users to import any brandy or “brandy concentrates”. The Department had argued that the imported goods were over-proof brandy and not “brandy concentrate”. The invoice of the consignment did not describe the goods as “brandy concentrate”. The Collector’s order refers to the invoice description of the goods. Furthermore, the French Customs Certificate also did not describe the goods as “brandy concentrate”. The meaning of “EAU-DE-VIE” was interpreted as spirit. Hence it was legitimate to hold that the goods were of beverage quality. Referring to the original and the supplementary show cause notices and the Board’s first order in appeal for remanding the case to the Collector for de novo adjudication, Shri Pal drew our attention to para 5 of the show cause notice dated 30-11-1976 which contained the evidence to hold that the goods were over-proof brandy. He further argued that the goods had been tested by the Customs House Laboratory and were found to be over-proof by about 2% .and not over-proof by 5% as invoiced. This showed that the strength of alcohol in the goods had come down from 5% over-proof to 2% over-proof. The import of the goods took place in April, 1974. The I.T.C. Policy did not define “brandy concentrate” in the AM-1973 Policy. The subsequent Policy AM-1974 changed the description to essence of brandy. The show cause notices alleged that the goods were not concentrate or essence. So far as the Appellants argument regarding the I.S. standard 4450-1967 was concerned, it was true that the brandy imported was over-proof. This was not in dispute. But the volatile acidity was more than that prescribed for brandy vide letter dated 4-7-1974 of Shri Jha to Shri Castellino of M/s. Herbertsons Ltd., Bombay. Similarly, the requirements of esters was more than the specification as per I.S.I. standard. As regards the C.C.N. Chapter Notes the same were referred by the Appellants during the course of the persofial hearing before the Collector and they had claimed that as per these guidelines the goods came within the heading “concentrated beverages” within the heading 22.09. Shri Pal further referred to the Cegat’s decision reported in 1983 ELT 529 which laid down that B.T.N. explanatory notes were a valuable guide for the interpretation of the Customs Tariff. The decision reported in 1983 ELT 1182 was also identical in nature. As regards Shri Chatrapathi’s Article Shri Pal contended that freshly distilled brandy was 35 to 5096 over-proof. Therefore according to this authority the imported goods could be, held to be brandy only. Shri Pal further referred to the aging of brandy in the same Article which reduced the strength of brandy. Shri Pal further argued that the Appellant’s contention that over-proof brandy was “brandy concentrate” was without any substance. He therefore, submitted that the imported goods were not concentrate but were brandy classifiable under heading 22.09 of the B.T.N. which included concentrates also. Besides the strength of the brandy was not necessary for classifying it under heading 22.09. The Board’s order in appeal exhaustively dealt with this leg of the Appellants argument. The imported goods were correctly classifiable under 22.09(I)(A) or (B). The classification under 22.09(II) was meant to cover only compounded alcohol preparations. As regards the Appellants contention for being given the benefit of the Government of India’s decision in the identical case of M/s. Tata Exports Limited and Another 1981 ELT 375, Shri Pal submitted that the Government of India’s order was not binding on the Tribunal, vide the Tribunal’s order in the case of Indian Pin Mfg. Co. (P) Ltd. 1984 (18) ELT 609. Besides the Government of India in their order had relied on the definition of brandy vide para 13 of their order. “Brandy concentrate” was a different product from brandy over-proof. In this behalf Shri Pal referred to Collector’s finding in his order dated 15-11-1975 para 14. As regards the Appellants request for being given the benefit of doubt, while correctly interpreting the Import Policy, Shri Pal contended that the same argument had been advanced by the Appellants in the course of the hearing before the Collector and also the Board. But these two authorities had rejected the argument. The Government of India did not accept the Appellants contention that over-proof brandy was “brandy concentrate”. They merely extended the benefit of doubt to the Appellants because the percentage of solids was high in the goods as compared to the I.S.I. standard. Shri Pal submitted that the goods were spirits and the licence was therefore not valid to cover their import. The fine was not excessive and was also not beyond the limit prescribed under Section 125 of the Customs Act as the goods imported were brandy over-proof.
4. In reply Advocate Shri Taleyarkhan stated that the invoice for the goods was not available earlier, but the invoice description was given in para 2 of the show cause notice dated 1-8-1974. In the revised show cause notice for de novo adjudication the goods had also been described in an identical manner. The Department had not charged the Appellants with misdeclaration of the goods in the bill of entry. The show cause notices referred to the correspondence exchanged by the Appellants with others. The show cause notice presumed that the goods described in the correspondence were not “brandy concentrate”. This assumption was not correct. There was no claim in the correspondence that the goods were a finished product. The correspondence therefore does not help the Department in determining the correct nature of the goods. As regards the change in the subsequent Policy for the following year Shri Taleyarkhan submitted that the description of the goods permitted import was further narrowed down. This might be in favour of the Department’s interpretation. But for the present import, AM-1973 Policy was relevant. The Appellants had referred to I.S.I. standard regarding alcohol contents for determining the classification of the goods. This was not disputed by the Department. As regards Shri Taleyarkhan’s reliance on the Tribunal’s decision in ELT 1983 1182, this decision was with reference to the new Customs Tariff introduced by the Customs Tariff Act 1975. Hence this decision was relevant for the purpose of this appeal. In addition the Advocate had adduced other evidence including Shri Chatrapathi’s Article. All this evidence pointed to the fact that the beverage brandy cannot be classified as 5% over-proof. After maturing, brandy is 25% under-proof. The Advocate pointed to Shri Chatrapathi’s Article in this behalf. He further argued that goods were only 5% over-proof and not 35 to 50% over-proof as interpreted by the Collector. He repeated that the imported brandy concentrate was not drinkable and this contention was taken up by the importers from the very beginning. This contention had not been answered by any of the authorities dealing with this matter. Heading 22.09 of the B.T.N. covered beverages only and not other alcoholic preparations. The industrial alcohol was not included in this heading except for one item in the proviso to heading 22.09. As regard the Senior Departmental Representative’s reliance on Compendium of Classified Opinion, the Advocate submitted that this was meant to help the Customs Officers at the time of bringing into effect the B.T.N. in 1975. It was therefore not applicable to the present appeal. The compendium was a compilation of opinions only. Concentrated brandy was used in confectionery even before the C.C.N. and the opinions contained in the compendium. The B.T.N. was available in French language also. The French Customs could have used the expressions from the B.T.N. while issuing the certificate dated 18-3-1974. But the fact that the French Customs did not use any such terms would show that the goods were not over-proof brandy. The Collector’s findings that the goods were beverage were not correct. If taken without dilution, the imported brandy concentrate would be injurious to health. The Collector’s finding was therefore wrong. In the identical case of imports of M/s. Tata Exports Limited their petition to the Government of India had been allowed and the Advocate argued that the same benefit should be extended to the present appeal. In the case of imports by M/s. Tata Exports Limited the solid contents were slightly higher than those in the goods under appeal. The Chemical Examiner’s test reports did not indicate the solid contents in the goods. However, the goods imported by Tatas were supplied by the same consignors and they were to be used in India by the same company, namely M/s. Herbertsons Limited. In view of this submission Shri Taleyarkhan requested that the present appeal should be allowed. In the alternative, he submitted that the Collector had violated Section 125 of the Customs Act in levying the amount of redemption fine and therefore the fine should be reduced substantially to come within the statutory limit if not totally set aside.
5. We have examined the submissions made on both the sides. The main point which calls for determination in the appeal is to decide the actual description of the goods imported with the licences produced for their clearance. The licences submitted for the clearances were RE licences permitting import inter alia of “brandy concentrate”. Therfore, the primary question to decide is whether the imported goods are “brandy concentrate”. In the show cause notice for de novo proceedings issued on 30-11-1976 the Custom House alleged that the licence was not valid as the importers could not explain the difference between Beehive Bouquet brandy and “brandy concentrate”. It was further alleged that brandy concentrate would mean a product in the nature of an essence to produce imitation brandy. In this behalf the Custom House relied on the import policy for the subsequent year, namely, 1973-74 during which the description of the item in the policy underwent a change from “brandy concentrate” to “essence of brandy”. A reliance was also placed on BTN, to prove that the imported goods were brandy and not brandy concentrate. In addition, evidence was led in the show cause notice by way of the correspondence taken over from M/s. Herbertsons Ltd. which reflected their keen desire for importing High Bouquet brandy as brandy concentrate during the year 1972-73 under the licence for brandy concentrate. The Collector of Customs, Bombay, in his adjudication order dated 18-3-1977 upheld the allegations and held that the licences produced by the importers were not valid to cover the imported goods. In this order the Collector came to the conclusion that the imported goods were classifiable as brandy and not as brandy concentrate which was synonymous with compound alcoholic preparations for the manufacture of beverages in the BTN heading 22.09. The appellant’s appeal to the Board against the Collector’ order was rejected as the Board also held that the imported goods were spirits and not compound alcoholic preparations. On the other hand, the importers have been vehemently contending at each stage of the proceedings that the imported goods are not capable of being consumed directly or even after dilution with water and they are not brandy as known to the trade. In this behalf they have relied on the evidence like the I.S.I. Standard 4450-1967 which gives the alcoholic content of brandy as 25 degrees underproof, the letter dated 4-7-1974 of Shri B.K. Jha addressed to Mr. V.A. Castellino of M/s. Herbertsons Ltd. Shri M.G. Menon’s book “Alcoholic Beverages Consumers Digest” 1973 edition, and the Article on the production of brandy By Shri M.C. Chatrapathi. This evidence is led to establish the definition of brandy for the purposes of Indian market. The appellants argue that the imported goods do not come within the meaning of brandy as known to the Indian market as per the aforesaid authorities. This evidence of the appellants was not refuted by the Collector and the Board. The Collector has merely gone on the basis of variations in the certificate of the manufacturers and the French Customs and the B.T.N. description for Heading No. 22.09. It is also seen from his order that his decision was influenced by the fact that in the past M/s. Herbertsons Ltd. and their sister concern M/s. McDowell Ltd. imported over-proof brandy under established importers licences for brandy. The Board also rejected the appellants contention relying on the fact that the brandy had different strengths in different countries of the world and that the goods did not fall in the category of compound alcoholic preparations for the manufacture of beverages. While both these authorities namely the Collector and the Board held that the imported goods were over-proof brandy, they rejected the licences through implication without specifically deciding the question as to what brandy concentrate is. From this point of view, even the appellants contentions are not to the point. Both the sides have not come forward with authentic definition of brandy concentrate which was permissible for import under the licences issued for the policy period 1972-73. Only during the course of the hearing of the appeal the learned advocate of the appellants referred in this behalf to the Compendium of Classified Opinions. The correct definition of brandy concentrate is only available from the Compendium of Classified Opinions. As per this authority brandy concentrate means brandy from wine lees with an added infusion of oak chips and/or almonds shells used in confectionery and it is classifiable under BTN heading No. 22.09. However, this is a definition which has not been adopted in the show cause notice or the Collector’s adjudicating order for holding that the goods are not brandy concentrate as per the licence definition. The show cause notice as observed above is based on the correspondence taken over from M/s. Herbertsons Ltd. This reveals that even the ultimate user of the goods, viz. M/s. McDowell Ltd. were not aware of the exact connotation of the term “brandy concentrate”. They had imported identical goods in the past and they were keen to obtain them under the REP licences held by them for importing goods for blending brandy manufactured by them. This fact had been accepted by the Collector who adjudicated the case and levied the fine in lieu of confiscation of the imported goods. However, the Collector relied on the French Customs’ certificate and the invoice to hold that the imported goods were not brandy concentrate but over-proof brandy and hence he held that the import licences were not valid. On the other hand, the appellants had contended in the appeal that the French Customs certificate does not mean over-proof brandy. The decription in the certificate meant that the goods were “water of life”, or a kind of alcoholic drink without any particular name. This contention of the appellants is borne out on the basis of the evidence adduced by them in this behalf. So far as the invoice is concerned, the copy of the invoice produced by the appellants during the course of the hearing of the appeal merely states that it is “Brandy Concentrate – (at high concentration) 60° GL (5° O.P.)”. The invoice description is also reproduced in the show cause notice. As per this description the goods are stated to be brandy concentrate, or 5° O.P. brandy. In other words, brandy concentrate is equated with 5° O.P. brandy. This is the manufacturer’s invoice and coupled with their certificate, it has to be given due weight in determining the nature of the imported goods. The use of identical goods imported has been proved to be for blending and it cannot be consumed as brandy in this country. Therefore, going on the basis of the past imports and their use, it cannot be stated that the goods are brandy as known in Indian Market. There is a host of technical opinion against the acceptance of this proposition. Therefore, despite the Board’s finding that the brandy is of different strengths in different countries, it cannot be said that the goods are brandy for the purpose of this import. The chemical analysis of the goods shows that the goods were 2° O.P. They also contain certain solids which are not found in brandy as per I.S. specification. The correspondence seized from M/s. Herbertsons Ltd. indicates the purpose for which the goods have been imported viz. for blending with the locally made brandy. Therefore, the goods are covered by heading No. 22.09 of the B.T.N. for alcoholic preparation for the manufacture of beverages. Therefore the goods are not brandy. Nor is it possible to interpret the licences on the basis of the I.T.C. policy for the subsequent year. But this still leaves the question of acceptance of the licences open. The licences are for brandy concentrate. The goods are over-proof brandy and on the basis of evidence adduced by the appellants, they are meant for blending with the locally produced brandy. However, in deciding whether the licences are valid to cover the imports, our task has been facilitated by the judgment of the Bombay High Court in Writ Petition No. 2407 of 1982 decided on 7-8-1986 in the case of Tata Exports Ltd. which has been brought to our notice by the appellants’ advocate subsequent to the hearing of their appeal. This decision covers an identical import of brandy concentrate by M/s. Tata Exports Ltd. In this judgment the Hon’ble High Court has held that the” Government of India who ultimately decided the Revision Application against M/s. Tata Exports Ltd. should have followed their earlier decision in an identical case of the same petitioners reported in 1981 ELT 375. In addition, the Hon’ble High Court inter alia further held that the goods imported were brandy concentrate and even on merits the order of the Collector, as confirmed by the Appellate Order of the Board and Revisional Order of the Government, was not sustainable. Accordingly, the writ petition was allowed. Si|nce this decision of the Bombay High Court is in an identical case, we respectfully adopt it and allow the present appeal.